It might so happen that you need to add some external email users in a distribution list along with internal users. External users might have their email from any free public email service provider or any other domain owned and managed privately by an organization.
The steps involved are similar to an additional step is required which is mentioned below:
1. Login to your O365 Admin portal and open Exchange Admin Center. From the left navigation pane select recipients and then click on contacts on the top.
2. Click on the Plus (+) Icon and select Mail Contact.
3. Enter the required information in the pop-up window and click on save.
4. Next click on groups, and select distribution group as shown in the following figure.
5. Fill up the necessary information and in the Members section click on the Plus (+) icon. In the new pop-up window search, the user by the first name or email address and the external mail contact will show up in the list.
6. Select the email ID’s which you wish to add to the Distribution Group and finally save it.
External emails are not added to the distribution list and depending on the settings of the distribution group both internal and external users can send email to the group and the email will be sent to all the members belonging to the group (both internal and external).